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Experts Say Senate Payroll Tax Plan is Unworkable



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Democrats clamoring for House Republicans to approve a Senate-passed (and White House-supported) extension of the payroll tax holiday got some bad news today. Though the House has already passed its own legislation to extend the existing 2 percent payroll tax cut through the end of next year, the Senate could only agree on a mere two-month extension. According to a group of payroll tax experts, such a short-term measure would be difficult to implement. ABC’s Jake Tapper reports:

Officials from the policy-neutral National Payroll Reporting Consortium, Inc. have expressed concern to members of Congress that the two-month payroll tax holiday passed by the Senate and supported by President Obama cannot be implemented properly.

Pete Isberg, president of the NPRC today wrote to the key leaders of the relevant committees of the House and Senate, telling them that “insufficient lead time” to implement the complicated change mandated by the legislation means the two-month payroll tax holiday “could create substantial problems, confusion and costs affecting a significant percentage of U.S. employers and employees.”

Here is a copy of the letter. The NPRC is a non-profit trade organization that does not take sides when it comes to policy:

“We’re neutral and we’d be happy to do the work,” Isberg told ABC News.

“The concern is really for those who don’t use a payroll service provider,” he said. Americans will have different outcomes, he said, causing confusion “because they’ll have different outcomes. Some will have it done on time, some won’t, some will have adjustment notices later in the year.”

House Speaker John Boehner (R., Ohio) predicted today that House Republicans would reject the Senate plan, citing concerns over the length of the extension. “No more kicking the can down the road,” he said. “It’s time to stop the nonsense.” House Majority Leader Eric Cantor (R., Va.) said the House would remain in session until an agreement can be reached on a year-long extension of the payroll tax holiday that is fully paid for. The Senate has already adjourned for the year.

UPDATE: Another group, the National Association of Wholesale-Distributors, writes Congressional leaders to “concur with the conclusion of the NPRC.”

“A two-month extension of the current reduced payroll tax rate,with the implicit rise in that rate in the first quarter of 2011, would exacerbate and escalate the uncertaintyabout fiscal policies that has inhibited business activity and slowed economic recovery and job creationfor the last several years,” the letter states.



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